Practical analysis for investment professionals
19 June 2015

Weekend Reads for Global Investors: What’s Next for Greece?

Posted In: Weekend Reads

One of the benefits of working in the investment management industry is that you’ll hardly ever get bored. Not even on a perfect summer weekend.

By the time you read this, we should know if the European finance ministers reached a deal Thursday to address the Greece situation. Either way, most believe that the “Greek tragedy” is unlikely to have a happy ending.

And this situation bears watching because the end game will have significant implications for Greece, Europe, and the rest of the world. The Financial Times has put together a calendar of upcoming events over the next four weeks: “Greek Debt Crisis: Key Dates on the Road to a Possible Grexit.” Dimitra DeFotis, for Barron’s, has written about “3 Reasons Greece Could Default without Grexit,” discussing some potential scenarios under which Greece may not have to drop out of the eurozone.

On a seemingly brighter note, Bloomberg reported that “China’s Stock Market Value Tops $10 Trillion for First Time” — not nearly as large as the US market but twice the size of Japan’s. Of course this number gyrates with the stock market’s every move. And if you have been invested in China’s mostly domestically traded shares in recent weeks, you know what I am talking about. To put it simply, you have to be comfortable putting this on autopilot and be able to handle 5% daily moves, up or down, on a regular basis. I suppose traders are loving this — if they can get on the right side of the trade, that is.

Janet Yellen chaired the widely watched US Federal Reserve meeting this week. The market seems happy that the Fed continued to signal a slow pace for rate hikes, possibly just one for 2015. Economic growth has been positive but probably “nothing to write home about.” Inflation has been well under control, so there does not seem to be any urgency in raising rates. What the Fed has been doing seems merely setting up the expectation for rising rates in the minds of market participants.

The Barron’s article mentioned above quoted Christopher Pissarides, a Nobel laureate, at the end. I met with Pissarides last fall when he was in Hong Kong to discuss the labor market research for which he earned so many accolades. The conversation unavoidably turned to Europe, since that’s where he has spent most of his time. I clearly recall his frustrations about the policy stance of European politicians and central bankers. “You have deflationary monetary policy, you have deflationary fiscal policy, all on top of a worldwide depression,” he remarked. “How are you going to get out of it?”

Indeed, how are they going to get out of it? I guess we’ll soon find out, at least in the case of Greece.

Below is a list of links from the paragraphs above as well as some of the other interesting reads I have come across in recent weeks. Happy reading and enjoy the weekend.



Emerging Markets


The Soft Side of Business

And Now for Some Readings Truly for the Weekend . . .

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

About the Author(s)
Larry Cao, CFA

Larry Cao, CFA, senior director of industry research, CFA Institute, conducts original research with a focus on the investment industry trends and investment expertise. His current research interests include multi-asset strategies and FinTech (including AI, big data, and blockchain). He has led the development of such popular publications as FinTech 2017: China, Asia and Beyond, FinTech 2018: The Asia Pacific Edition, Multi-Asset Strategies: The Future of Investment Management and AI Pioneers in Investment management. He is also a frequent speaker at industry conferences on these topics. During his time in Boston pursuing graduate studies at Harvard and as a visiting scholar at MIT, he also co-authored a research paper with Nobel laureate Franco Modigliani that was published in the Journal of Economic Literature by American Economic Association. Larry has more than 20 years of experience in the investment industry. Prior to joining CFA Institute, Larry worked at HSBC as senior manager for the Asia Pacific region. He started his career at the People’s Bank of China as a USD fixed-income portfolio manager. He also worked for US asset managers Munder Capital Management, managing US and international equity portfolios, and Morningstar/Ibbotson Associates, managing multi-asset investment programs for a global financial institution clientele. Larry has been interviewed by a wide range of business media, such as Bloomberg, CNN, the Financial Times, South China Morning Post and the Wall Street Journal.

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